New FinCEN Beneficial Ownership Reporting Regulations Aim to Enhance Transparency

The Financial Crimes Enforcement Network (FinCEN) has unveiled new regulations mandating enhanced beneficial ownership reporting for certain business entities. Effective as of January 01, 2024, covered companies must disclose detailed information about their beneficial owners to FinCEN.

The aim is to combat financial crime by increasing transparency and making it harder for illicit actors to hide behind opaque ownership structures.

Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.

Reporting Companies

There are two types of reporting companies:

• Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.

• Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

A beneficial owner is an individual who either directly or indirectly:

(1) exercises substantial control over the reporting company, or

(2) owns or controls at least 25% of the reporting company’s ownership interests

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